The renewed trust by these marquee investors is expected to provide more comfort to local lenders who finance MFIs for on-lending.

IFC’s investment is likely to be completed in a week’s time, Grameen Koota managing director Udaya Kumar told ET.

“IFC partnering us is a very important development. This is positive for the entire sector,” Kumar said.

IFC will subscribe to non-convertible debentures issued by the MFI for five years.

“This investment will promote a more balanced growth of microfinance in India. Grameen Koota’s operations are expanding in western and central India where MFI penetration has historically been low,” IFC had said in a disclosure issued on May 16 last year.

The MFI plans to open 60 branches this fiscal to add to the current tally of 393 as it aims to grow loans portfolio 35-40% to Rs 4,200-4,300 crore from Rs 3,075 crore at the end of FY17. The Bengaluru-based MFI had also received Rs 250 crore of fresh capital in the last week of March from its holding company, CreditAccess Asia, an Amsterdam-based Asian microfinance player.

On Monday, local brokerage firm Indianivesh Capital announced Rs 25.7-crore investment in Maharashtra-based micro lender M Power Micro Finance. This will be followed up by another Rs 10-crore infusion in the next one year, Indianivesh said, showing faith on the sector.

Meanwhile, Morgan Stanley, which is the largest shareholder in Bharat Financial with a 6.74% stake, backed the MFI despite Rs 235-crore fourth-quarter loss.

“It is a pure microfinance play with a robust model and has reported significantly better asset quality trends than the industry following demonetisation,” Morgan Stanley said. “The stock could come under pressure in the near term but we expect outperformance over a one year period as normalcy returns and growth picks up,” it said.

The Rs 57,000-crore microfinance sector had faced stress in collection efficiency in the four-five months into demonetisation. Collection was also hit by talks of loan waiver in several pockets.